Mark Keller (plaintiff) v Michael Crowe (defendant).

Real property - Equity - Agreement for the sale of land - Specific performance - Scope of auctioneer's authority as agent of vendor - Sufficient note or memorandum - Statute of Frauds (Ireland) 1695.

The High Court (Mr Justice Kelly); judgment delivered 6 August 1999.

Where a letter to a vendor of property, written and signed by an auctioneer who is acting on the vendor's behalf and who has authority to sign same on his behalf, conforms with the requirements of the Statute of Frauds, then such letter will constitute a sufficient note or memorandum under the Statute.

Mr Justice Kelly so held in granting the plaintiff purchaser a decree of specific performance in respect of an agreement for the sale of land.

Sean Ryan SC and John O'Kelly BL for the plaintiff; Bill Shipsey SC and Pat Horgan BL for the defendant.

Mr Justice Kelly set out the facts of the case stating that the plaintiff, a solicitor of over 20 years experience whose principal area of practice was property law, sought an order of specific performance of an agreement for the sale to him, by the defendant, a businessman, of commercial property situate on Merchants Quay, in Waterford city.

The defendant had placed the property on the books of a number of auctioneers, one of whom, a Mr Tom Grace, (hereinafter "the auctioneer"), played a pivotal role in the negotiations which led to the alleged contract which the plaintiff sought to have specifically enforced.

The defendant contacted the auctioneer about the sale of the property in February 1997, and in mid-summer 1997 the plaintiff spoke with the auctioneer, who told him that the asking price was £500,000, which was not open to negotiation. The plaintiff offered that sum of money but when the auctioneer passed on the offer the defendant indicated that £500,000 was not acceptable. Thereafter, the auctioneer spoke to the plaintiff on a number of occasions and on one such occasion said that the plaintiff might be able to buy the property for £525,000. The plaintiff told him to proceed on that basis but when the auctioneer told the defendant that he could obtain £525,000 the defendant declined the offer.

The defendant contended that when the second offer was put to him there were two stipulations attached; firstly, that the plaintiff would be the sole party interested and secondly, that a verbal binding agreement would exist if the offer was accepted. He stated that he made it clear to the auctioneer, that he had no interest in either of these stipulations and that he had told the auctioneer that all future business would have to be strictly subject to contract; that had been the way in which his previous property dealings had always been conducted and he said that the auctioneer had no authorisation to deal otherwise.

Mr Justice Kelly noted that three witnesses had given evidence in the case, the plaintiff, the auctioneer, who, although retained by the defendant, gave evidence on behalf of the plaintiff, and the defendant. At no stage did the plaintiff and the defendant have face to face discussions, at all stages the auctioneer was the intermediary. Having had the opportunity to carefully listen to, and observe, the defendant and the auctioneer in the giving of their evidence, Mr Justice Kelly stated, that by comparison with the auctioneer, the defendant was not an impressive witness and that the evidence of the former was to be preferred in any area of conflict between their versions of events.

On 21 November 1997 the auctioneer met with defendant, who indicated that he was still of a mind to sell the property, that he required a price of £550,000, with a deposit of £100,000 and a closing date six months hence. The auctioneer telephoned the plaintiff, who made it clear that any deal would have to be immediately binding and that he would not make any offer unless there was a clear and unequivocal undertaking to that effect. The auctioneer told the defendant that the plaintiff was prepared to pay £550,000 but that he wanted a binding deal; the defendant accepted the plaintiff's offer. The auctioneer then telephoned the plaintiff and said that the defendant wanted a six months closing, a £100,000 deposit on signing the contract and that £20,000 of that would suffice for the moment. The plaintiff agreed to these terms.

It was common case that there was no mention of the "subject to contract" term in the conversations which took place between the defendant and the auctioneer on 21 November. However, Mr Justice Kelly rejected contentions by the defendant firstly, that the auctioneer at all times remained under instructions from an earlier stage that everything was to be subject to contract and that he had no authority to go outside this and secondly, that the auctioneer did not mention the fact that the plaintiff wanted a binding agreement.

Mr Justice Kelly stated that he was satisfied that by the evening of 21 November 1997, there was a final agreement between the plaintiff and the defendant, for the sale of the property for £550,000, with a £100,000 deposit, (£20,000 to be payable immediately and a further £80,000 on the signing of the contract), and a six-month closing. The agreement was not subject to any stipulation concerning subject to contract and was made on the express understanding that it was to be binding.

On 24 November the plaintiff wrote to the auctioneer, confirming acceptance of the defendant's offer, and indicating willingness to purchase the defendant's property on Merchants Quay for £550,000 and enclosing a cheque for the £20,000 booking deposit.

The letter went on to state that the deposit was sent on the understanding that this was a binding agreement for the purchase of the freehold property, and on the understanding that a further deposit of £80,000 be paid on the signing of the contract, with the closing date six months from the date hereof. The plaintiff forgot to sign the cheque, which was enclosed with the letter, but this was remedied when the auctioneer called to the plaintiff's office. The cheque, made payable to the auctioneer, was cashed and the proceeds placed on deposit.

On the plaintiff's request, the auctioneer wrote to him, by letter dated 26 November, acknowledging receipt of the plaintiff's letter, and stating that a copy of that letter had been sent to the defendant. In the letter, the auctioneer confirmed that he had lodged the plaintiff's deposit of £20,000 and was holding it as stakeholder. The letter also stated that the auctioneer had confirmed the details of the transaction to the defendant's legal representatives and had requested them to forward a contract to the plaintiff.

In compliance with a request from the defendant, the auctioneer wrote to him by letter dated 24 November, confirming that he had taken the defendant's instructions and agreed to sell the freehold property at No. 25/28 The Quay, Waterford, to the plaintiff for £550,000; a booking deposit was to be paid to the auctioneer and a further £80,000 was payable on the signing of the contract; the closing date was to be six months from the date of the letter but if the defendant wished to close a little earlier the auctioneer indicated that there should not be a problem. The auctioneer also stated in his letter that he would confirm the details of the sale to the defendant's solicitor.

Mr Justice Kelly stated that whether or not this letter was sent to the defendant did not affect its efficacy as a note or memorandum for the purposes of the Statute of Frauds, indeed it had been conceded by the defendant that it was a perfect memorandum for the purposes of the Statute; the only issue that was raised concerning it was the authority of the auctioneer to bind the defendant by his signature of it. Mr Justice Kelly stated that, having regard to his finding concerning the authority that was given to the auctioneer to conclude the agreement with the plaintiff on the preceding 21st, he was quite satisfied that the auctioneer also had authority to bind the defendant by signing the appropriate note or memorandum. This was such a note or memorandum and consequently the contract was specifically performable.

The defendant contended that he was sent a letter dated 24 November 1997 by the auctioneer similar in every respect to the one on the auctioneer's file, except that it was headed "subject to contract and title", which letter would certainly not qualify as a note or memorandum under the Statute of Frauds - see Boyle v Lee and Goyns [1992] ILRM 65. The defendant was, however, unable to produce the original of this letter, nor could he produce a copy which he had said he had lodged with the bank. The copy he actually produced in court was, he told the court, kept in his possession, at home, on top of a wardrobe. Although acutely aware of the importance of the term "subject to contract", he never brought either the original, or a copy, of this letter, to his solicitor, for any legal advice concerning these proceedings.

Mr Justice Kelly noted that another strange feature of the defendant's behaviour during these proceedings was his admission that the terms of the agreement negotiated on 21 November 1997 as to price, closing date and deposit, were precisely in accordance with his wishes and that the only matter which brought about the proceedings was a change of mind on his part concerning the deal.

Mr Justice Kelly stated that the defendant was bound in honour to sell his property to the plaintiff in accordance with the terms agreed on 21 November 1997 and on this occasion the defendant's obligations in honour and those binding in law were coincident. This was so by virtue of the letter of 24 November, written by the auctioneer, which the defendant said that he never received; even if that letter did not exist however, the exchange of correspondence between the plaintiff and the auctioneer, dated 24 and 26 November 1997, would constitute a sufficient note or memorandum for the purposes of the Statute of Frauds.

Accordingly, Mr Justice Kelly held that the plaintiff was entitled to a decree of specific performance of the contract compelling the defendant to effect the sale of the premises in suit to the plaintiff for the agreed consideration of £550,000.

Solicitors: Peter O'Connor & Son (Waterford) for the plaintiff; Nolan Farrell & Goff (Waterford) for the defendant.